As foreclosure cases increasingly become litigated in Massachusetts, foreclosure by entry—once considered by many to be a mere back-up option—is becoming an important area of foreclosure practice.
Nearly all foreclosures in Massachusetts are foreclosures by power of sale, or “non-judicial” foreclosures. With the exception of the Servicemembers Civil Relief Act case, meant solely to determine whether a claimant is in the military, a foreclosing entity does not need to bring a court case or obtain a judicial order to foreclose a property. However, while a non-judicial foreclosure allows a foreclosing entity to obtain title to a property, it must go to summary process (the lawyerly word for an eviction case) to obtain possession of the premises. In Bank of New York v. Bailey, the Supreme Judicial Court held that a defendant in a summary process case involving a foreclosed property may challenge the validity of the foreclosure as a defense to the plaintiff’s claimed right to possession. This had lead to summary process becoming an active forum for deciding the validity of foreclosures in Massachusetts. Given the complexity of the issues in these cases, these matters often last well beyond the timeframe for a typical landlord/tenant case.
Foreclosure by entry is another type of foreclosure in Massachusetts. Compared to a foreclosure by power of sale, a foreclosure by entry has far fewer statutory requirements. Pursuant to G.L. 244 § 1, a mortgagee can obtain a foreclosure by entry by making an “open and peaceable entry” on the mortgaged land. Then, the mortgagee must record a certificate of this entry in the land records, signed by two witnesses. The holder of the mortgaged property then has three years from the date that this memorandum is recorded to “oppose” this entry. If this entry is not opposed, the mortgagee is entitled to foreclosure. While a foreclosure by entry has fewer requirements for foreclosure, this process requires a three year “wait period;” a timeframe that is significantly longer than a foreclosure by power of sale. In the past, mortgagees would often file a certificate of entry as a backup plan with little expectation of this method being needed for foreclosure. Often, the mortgagor will have left the property long before this three year period has elapsed.
Today, however, foreclosure by entry promises to take on a greater role in Massachusetts foreclosure law. Why? With the increased number of foreclosures in the Commonwealth, and the increased number of defenses in these cases, a mortgagee can easily be defending against a foreclosure years after the non-judicial foreclosure occurred. Challenges to foreclosures are almost always about the non-judicial foreclosure and involve challenges to the foreclosing entity’s standing to bring the foreclosure and whether the involved parties followed the proper notice requirements. Creeping in the background, however, is the foreclosure by entry. With the complexity of the issues in these cases, and the backlog of the trial courts, many of mortgagors challenging their foreclosures find themselves getting close to the three-year deadline for challenging the foreclosure by entry.
For a process that has existed for over years, little case law exists on foreclosure by entry and like any challenging area of law, there remains more questions than answers. One unresolved issue is what constitutes “opposition” for a foreclosure by entry. Does a mortgagor need to specifically oppose the foreclosure by entry or is an opposition to foreclosure in general enough? This issue has faced many mortgagors who have diligently challenged their non-judicial foreclosures, but have not specifically addressed the certificate of entry.
It is also unclear whether the Supreme Judicial Court’s U.S. Bank v. Ibanez holding is applicable to mortgagees performing a foreclosure by entry. Ibanez requires a foreclosing entity to be the holder of the mortgage at the time of the non-judicial foreclosure. Ibanez’s reasoning would seem to apply equally to a foreclosure by entry, but it remains unclear whether certificates of entry recorded by entity without assignment of the mortgage would equate to a valid foreclosure by entry.
Finally, it also remains uncertain whether the notice provisions for foreclosures, under both statutory law and the terms of most mortgages, apply equally to foreclosures by entry. The majority of trial court decisions in the Commonwealth have taken the position that non-judicial foreclosures must “strictly comply” with these requirements. This notice requirements seem to be written broadly enough to cover all methods of foreclosure, but only time will tell if these challenges are effective against foreclosure by entry.
The little case law that does exist regarding foreclosure by entry suggests that any type of opposition is sufficient to challenge a certificate by entry. To be on the safe side, such opposition should specifically address the certificate by entry and make it certain that the mortgagor objects to this specific method of foreclosure. Demand letters, affidavits, and notices of trespass addressed to the mortgagee all seem to be adequate means of making this opposition. Depending on the registry of lands, a G.L. 183 § 5B affidavit related to land may also be option.